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The chart is a guide rather than an absolute – feel free to modify
or adjust it as need to fit the specific ideas that you are
developing.
Area: SALES
Specific Change Plans for Functional Areas
Capability Being Addressed
This can be pulled from the strategic proposal recommended in
Part 2B
How do the recommended changes (details provided below) help
improve the capability?
This is a logic "double check". Be sure you can show how the
changes recommended below improve the capability and help
address the product and market focus and add to
accomplishment of the value proposition
Details of Specific Changes:
Proposed Changes in Resources
Proposed Changes to Management
Preferences
Proposed Changes to Organizational
Processes
Detailed Change Plans
(Lay out here the specifics of all recommended changes for this
area. Modify the layout as necessary to account for the changes
being recommended)
Proposed Change
Timing
Costs
On going impact on budget
On going impact on revenue
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THE ENVIRONMENT/INDUSTRY
1. Drivers of change
Key drivers of change begin with the availability of
substitute products. Many
other
companies can easily provide a substitute and the firm will have
to find a way to
stand
out among them. Next would be the ability to differentiate
yourself among other
firms
that pose a threat in the industry. Last, the political sector.
The the federal, state,
and local governments could all shape the way healthcare is
everywhere.
2. Key survival factors
Key survival factors would include making the firm stand out
above the rest in the
industry and creating a name for itself. Second would be
making sure there is a
broad
network of providers available for the customers. Giving the
customer options
will
make the customer happy. Providing excellent customer service
is key to any
firm in
the industry.
3. Product/Market and Value Proposition possibilities
Maintaining the use of heavy discounts will keep Careington
in the competitive
market. They also concentrate on constantly
innovating technology to make
sure that
they have the latest devices to offer their customers. To have
high value proposition, Careington
will need to show their costumers that they can believe in them
and trust them to
do the right thing. Showing the customers that they can always
be on top of the
latest
technology and new age products will help build trust with the
customers.
STRATEGY OF THE FIRM
1. Goals
Striving to promote the health and well being of their clients
by continuing to
provide
low cost health care solutions. A lot of this concentration is on
clients that cannot
afford health care very easily or that are uninsured.
2. Product focus and market focus
Market focus has always been providing the low cost products
no matter if it is an
individual or corporation. The products include dental care,
laboratory services,
nursing services, alternative health and medicine, and diet and
weight loss
solutions.
3. Value proposition
Always providing low cost health care and providing products
and services
beyond the
norm for health care, Careington has created high value within
their clients.
4. Core Activities
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Providing everything from health care solutions to everything
in between
including
care for the customers pets, financial needs, counseling, and
much more.
Careington
provides much more than just based health care. They go
beyond the basics to
cover
every aspect of the customers needs.
ORGANIZATIONAL CAPABILITIES OF THE FIRM
1. Noticing at all times that the customer is always looking to
save money when
subscribing to their services.
2. Striving to make sure that they can offer the best customer
service in the market.
This comes from sales services to after-sales service to
customer service for existing
customers.
3. Always investing in ways to create a product that can be
offered at discount prices
and packaging plans to save the customer money.
PERFORMANCE OF THE FIRM
1. Financial Performance
Careington Company has estimated annual revenue of $19.9
million. The company
employs a workforce of 51 and 200 professionals. The company
uses its finances equitably
among its various operational sectors. Most of the company’s
finances are directed towards
realization of projects which helps it achieve its goals and
objectives. In order to maintain a
strong motivated workforce, the company operates a reasonable
remuneration system for its
workers. The company has had a reasonable financial record
over the years with accurate record
keeping and accountability in all its sectors (United States,
2006).
2. Market Performance
The company has entered into a contract with Metropolitan Life
Insurance Company, Inc.
to provide a free discount prescription card via MetLife’s
United States Sponsored Direct
business network. This is a sales channel which partners with
sponsors in order to provide their
clients or members with simple, cheap products which meet the
requirements of the United
States market. The company is able to do business with other
business partners of MetLife
through the agreement. These other businesses include financial
institutions, loyalty clubs,
associations, as well as publishers (A.M. Best Company, 2003)
The company provides cheap solutions to more than eight (8)
million people who are
members of the company. It has over 196, 000 dental access
points and provides one of the
biggest in depended provider panel in the U.S. As the holder of
the industry’s biggest provider
networks, the company is usually called upon to work directly
with a number of most treasured
PPOs, HMOs, as well as national insurance corporations (United
States, 2006).
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3. Organizational Health
The company’s solutions are designed to help and complement
traditional health
insurance and give significant savings for those individuals who
are uninsured or are under-
insured. It also provides the healthiest cost reduction twice or
thrice bigger than majority of
dental services companies in the country (United States, 2006).
With over eight million satisfied individuals and growing, the
company has strategically placed
itself to become the most creative and innovative dental partner
in the United States of America.
Regardless of whether you are a small worker group or a big
self-sponsored organization, the
company will customize a dental program particularly for you.
The company, in fact, asks the
client to participate in designing the program. Careington has
the ability to even package
ancillary services like prescription and vision drug discounts
with the client’s dental program
(A.M. Best Company, 2003)
The discount prescription cards provided by the company
though its partnership with
MetLife frees of charge enables design members as well as their
families to pay a discounted
amount at the place of service for name-brand as well as generic
prescriptions at broadly
participating pharmacy sites all over the country, including
independent as well as local
neighborhood dispensaries. MetLife sponsor customers simply
who must simply agree to provide
free descriptions discount cards and Careington shall then
distribute the cards to all customer
members who are participating (United States, 2006).
2. ORGANIZATION AND ANALYSIS
a. The Strategy ßà Environment Link
Compare the drivers of change and key survival factors of the
environment with the
strategy components of the firm. Identify:
● Where, if at all, there is a good fit between environmental
demands and the firm’s
strategy. That is, identify how the strategy does a good job of
addressing/responding to specific drivers and/or KSF.
▪ The Firm has made a good fit for itself in the environment
because the
environment is full of consumers that are under or uninsured
and that is
the perfect market base for Careington. Carington has made
adaptations to
the environment by responding to the need for individual
consumer
suplementation as well as Business needs.
● Where, if at all, there is a misfit between the environmental
demands and the
firm’s strategy. That is, identify how the strategy does a poor
job of
addressing/responding to specific drivers and/or KSFs
▪ There may be a gap between Careington’s current strategy and
the
technology race that has flooded the country. Their website
doesn’t pull
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on google unless you ask specifically for “Careington”. That
could be a
possible place that they loose business.
● Where there are potential future misfits (given current
industry trends). That is,
identify where the strategy is likely to fall short of
addressing/responding to
specific drivers and/or KSFs in the future
▪ There may be a gap in the marketing sector. They have built a
good brand
and need to be able to get their name out to the potential
individual
customers rather than focusing all of their energy on B2B.
b. The Strategy ← → Org.s Capabilities Link
Now look inside the firm and compare the package of Org.
Capabilities created by
Resources, Management Preferences, and Organization with the
strategy components of
the firm. Identify:
● Where, if at all, there is a good fit between the org.
capabilities of the firm and the
firm’s strategy. That is, show how the capabilities support
specific aspects (value
proposition, goals, etc.) of the firm’s strategy
▪ There is a good fit between the organizations customer
capabilities and the
strategy. Customer service is important to the company and
they show
that through their Member services department’s support of the
customers.
● Where, if at all, there is a misfit between the org. capabilities
of the firm and the
firm’s strategy. That is, show how the capabilities fail to
support specific aspects
(value proposition, goals, etc.) of the firm’s strategy
▪ The place that there is a misfit between the strategy and the
capabilities is
in their provider portal. They could utilize this instrument
much more
efficiently.
▪ Management decisions to improve communications to the
outside. Public
relations needs to get the name out in the open.
● Where there are potential future misfits (given current trends
within the firm).
That is, show where/how the capabilities may fail to support
specific aspects
(value proposition, goals, etc.) of the firm’s strategy in the
future
▪ There is a potential for future misfits in their innovative
capabilities. They
have a good network now, but in the future they will need to be
able to
more technologically advanced to serve the providers and
members better.
c. Firm Performance and Strategic Gaps
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Theory and empirical research inform us that firm performance
is closely related to the
firms position vis-à-vis the criterion of consistency. That is,
the better the fit among the
three components of in the criterion of consistency framework,
the better is the firm’s
performance.
Review the results of your “fit” analysis and attempt to
document how the fits/misfits
identified in your analysis may explain the achievements or
lapses in firm performance
on one or more of the three dimensions: financial performance,
market performance and
organizational health
The presence of fits and misfits within an organization can have
a substantial influence
on Careington’s financial performance, market performance,
and it’s organizational health.
Though successful they still continue to improve their market
performance and organizational
health. Currently, Careington has been working hard to not
only retain but also expand their
market share as well as build and sustain a more competitive
advantage in the market place.
Careington has used several successful approaches to maintain
its competitive advantage over its
competitors. One way they keep a competitive advantage over
competitors is by offering deep
discounts with a reliable network, they do this getting low
discounts then negotiating lower
discounts which makes it difficult for competitors to compete
with them. Another way
Careington provides excellent service is by building, nurturing
and maintaining a good
relationship with their service providers. They do this by having
staff dedicated to taking care of
different issues with members and their providers. Careington is
also good at complying with
the strict licensing guidelines. they do this by making sure they
are up to date with the most
current legislation and keeping up with the state regulatory
requirements. Their main focus and
strongest competitive advantage is to keep a strong and
enduring relationship with their B2B
customers. They maintain this strong by having face to face
meeting, as well as networking
rather than the traditional efforts of marketing and promotions.
By them going through all this
trouble to maintain a good relationship with their providers and
clients, while still offering a
good product for a low price this helps them increase not only
their market performance and
organizational health but help them increase their financial
performance.
On the other hand, with the the discounted health care plan
market competition rising,
differentiating the selves from consumer is key to success for
Careington. Careington currently
suffer from low awareness of their company and products. they
also lack the technology to stay
competitive with the rising popularity of telemedicine. The also
prefer to improve all their other
aspects of their company rather than improving their brand.
Since the current market is trending
to a more individual model, Careington is looking into entering
that potentially profitable market.
They also would like to continue to increase customer
awareness of their discount products
through face to face meeting, and networking. They recognize
that they are in need of mass
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marketing to reach a larger segment so people know about what
they have to offer. Their fears of
mass marketing are that their ROI won't be high enough to
cover what their going to be spending
on mass marketing since it tends to be very expensive. Another
one of their fears is that they
don't know exactly what their customers use their discounts for
since they don't require their
providers to them with data, which makes it harder for them to
figure out who and what they
should target. If they keep lacking at awareness, with the rise in
competition they are bound to
lose their good market performance and organizational health,
as well as a decline in their
financial performance.
3. CONCLUSIONS AND RECOMMENDATIONS
Given the above, answer the following questions:
a. Overall FIT and Symptoms: Taken together, how do you see
the overall alignment
among the elements of the “criterion of consistency”? That is,
is there a good fit, an ok
but weakening fit, a poor fit, a really bad fit, etc.? Be sure to
explain WHY you believe
this is the case. Next, refer back to your assessment of firm
performance and show how
this fit (or lack of fit) is reflected in the performance of the
firm. That is, can the
“symptoms” of underlying problems (e.g., decreasing sales or
market share, poor
profitability, disgruntled employees, etc.) identified in your
analysis of the firm’s
performance be traced to specific strategic “fit” problems?
b. Selecting the Most Significant Issues Facing the Firm:
Based on the fit/misfit identified above, highlight the areas that
you see as the biggest
issues/problems. That intent here is to move beyond the
symptoms identified through
performance and other previous analysis above to reveal the
underlying causes that the
firm must address. That is, what is causing the symptoms (e.g.,
decreasing sales or
shrinking market share, poor profitability, disgruntled
employees, etc.) that were
identified above? Where possible, these causes should be
expressed in terms of the
alignment (or misalignment) between specific strategy
components and specific aspects
of the environment and/or org. capabilities (e.g., the
product/market focus is no longer
appropriate for the environmental conditions of … because; the
… org. capabilities do
not support the value proposition because ..., etc.).
Technological/innovative growth overtaking many of the
services provided in Careington’s
industry, reducing value of their particular service by
replacement with technology.
Need for an increase in business or else will flat compared to
competitive alternatives-
hesitance in mass-marketing (a weaker part of their strategy)
could result in inability to
surpass growing competition and lose customer basis.
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c. Project Future Performance of the Firm Given the Challenges
identified in “a’ and
“b” above:
Given your descriptions of this “current state” of the firm, what
would you expect
performance to be like in the next few years if they do not make
any changes to their
strategy and/or operations? Undertake the following:
I. Briefly describe the likely future state of the firm in words,
showing where/how the
issues identified above are likely to affect the actions and
outcomes of the firm.
In the future, Careington is likely to continue to experience
growth similar rates as
the past, per indications in the steady growth rates. 5 years from
now, however, they
might experience a static or smaller rate of growth, because the
industry which it
performs is growing in competitiveness and Careington is not
showing in their
financials any action to improve the rate of growth which it
falls align to.
-Issues (listed above) likely effect on the future outcomes and
actions:
II. Use techniques taught in earlier classes (e.g., accounting,
finance, marketing, etc.)
to project a 5-year pro forma income statement that assumes a
logical progression
of the firm’s current strategic fit and performance levels.
Specifically, do the following:
● Use a 5-year timeframe
● Use the common-size (sometimes called “vertical analysis”)
technique/tool to
project the performance of the firm over the next five years,
assuming that (a) it
makes no changes to its current strategy or capabilities and, (2)
industry changes
will occur in the direction predicted by you in Part-1A of the
SBI process
● Provide this projection, in a table, and on a single page
● Use additional sheets (if needed) to identify the “base
components” line
item used in the computations of other line items, any
assumptions made,
and any clarifications that are deemed necessary
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Like mentioned before, Careington is likely to keep
experiencing steady growth at similar rates
as in previous years. A trend projection analysis was performed
using a regression line (Sales
Revenue = 123.56 + 17.65*Period) taking in count sales revenue
for the past three years and any
expected industry changes that could occur in the following five
years.
PART 2-B
SELECTING A NEW STRATEGY
In the previous steps, you evaluated the current fit in the
company and, in doing so, highlighted
the major issues/problems faced by the firm. Your task now is
to generate and evaluate possible
solutions. Given your previous work, you probably have a
number of ideas of what the company
“could do”. Note that this is very different from what they
“should do”. Following the
process outlined below will help you move from generic
“coulds” to justifiable “shoulds”.
1. DATA COLLECTION
This is where you can collect all your ideas, new and old, about
what the company could do.
Try to brainstorm here, being open and not rejecting things at
this point. The intent is to get
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all of the ideas out on the table, and the only caveat is that the
ideas be directed at solving the
issues/problems addressed in the previous step. However, do
try to channel your thinking
into two broad categories:
Strategic Adjustments: These are changes in strategy
components (goals, product
focus/market, focus, value proposition and core activities) that
the
firm could consider
Focus the company on getting the name out to potential
individual consumers.
Technological advancement to the current technological era.
Capability Changes: These are changes in org. capabilities that
the firm could consider to
address the strategic adjustments proposed (above) by you.
They could add more strength to their marketing department.
Right now Marketing is left
to each department. They need to emphasize marketing the
Careington brand as well as
marketing to the business customers.
2. ORGANIZATION AND ANALYSIS OF DATA
With all the ideas on the table, you now need to sort through
and organize them into at least
two viable strategic proposals (you are welcome to do more than
two if you want). For each
proposal, you need to document the following:
a. Describe the specific changes in strategic components being
recommended
b. Clearly explain how and why you believe the proposal
addresses the major
issues/problems facing the company
c. Describe, in general, the changes to the current capabilities
that need to be made so that
the firm can successfully implement its new strategy
d. Identify (at least broadly) the impact that all these changes
would have on both the
revenues and expenses of the company. .
Note: While there can be some overlap in the two proposals,
they need to be unique in
substantive ways.
Proposal-1
a. Mass Marketing on a smaller scale (B2P focus)
b. Targeted Social Media ads, Radio ads, Billboards, etc.referral
systems
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c. Switch the focus from B2B to B2C while creating a new
“Intro Portal” to capture clients.
Also building a more complete marketing department that
includes corporate level
executives to monitor and promote the new programs.
d. There will be a large upfront cost of capital for the cost of
the advertising, but the
exposure of return will give at least a 10% ROI, helping to
significantly grow the B2C
portion of the company.
Proposal-2
a. Build a second office on the west coast for Recruiting in
major markets.
b. Some west coast states, namely California, want easier access
to the company.
c. Switch the focus from B2B to B2C
d. Big up front expense but saving on travel expenses. More
direct contact with the
customers will bring in more revenues.
3. CONCLUSIONS AND RECOMMENDATIONS -
STRATEGIC CHOICE
Now you must make a choice between your proposals. Use the
information in your
tables as well as any other thoughts you have to determine your
preferred proposal. Then
answer the following questions.
● Which proposal do you prefer?
We prefer the first proposal.
● Why do you prefer this proposal?
We think that this is the better all around approach to the needs
and challenges that
Carington is facing today. It provides a way for the company to
expand their growth into
the B2C sector while not abandoning the B2B side of the
company. It will also come at
minimal costs to other mass-marketing campaigns, and based on
the ROI, the program
could be expanded in the future.
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● Which proposal carries more risk? Why?
The second proposal carries more risk due to the large upfront
cost of placing a new
location. All business operations can be taken care of out of the
central office in Texas.
While there would be a reduced cost of travel, it is unknown if
there would be enough
business to support the cost of the new building.
● What might occur (inside or outside the firm) that would
make your preferred
proposal fail?
If there are major changes in the way that discount dental plans
are regulated, or if there
is a major change in the way health care is used in the United
States.
PART 3-A
DEVELOP NECESSARY CHANGES TO ORG.
CAPABILITIES AND A PLAN TO IMPLEMENT THEM
Now that you have selected a strategic proposal, you need to
provide an analysis of the changes
to various organizational components that are necessary to
develop the org. capabilities that will
make the strategy a success. This includes recommendations on
both how and when these
organizational components need to be adjusted to meet the
needs of the new strategic proposal as
well as reasonable forecasts of the cost and revenue
implications of each change. Use a 5-year
time-frame for the analysis.
Readings in the book and supplements highlight a number of
broad issues to consider in putting
together your implementation plan. Class material offers
additional specific ideas. We suggest
that you carefully review this material and consider the ideas
suggested.
1. DATA COLLECTION
To accomplish the task laid out for you, the following
information must be generated or
collected. Completing this analysis in the sequence provided
will help to ensure a logical flow
between the pieces.
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Note: This is a long and labor-intensive exercise!!!!
Budget your time accordingly.
1.1 Initial Change Ideas
• In Part 2-B you developed a list of broad changes to the org.
capabilities that would be
needed to support your proposed strategy changes. Build on
these to describe in more
detail specific changes to the current org. capabilities that need
to be made so that the
resultant “new” capabilities (alterations to existing capabilities
and/or truly new org.
capabilities) can be used to successfully implement the new
strategy.
a. Careington needs to switch the focus from their current B2B
focus to a B2C focus
to bring in the individual.
b. They need to create a new “Intro Portal” to their website to
capture new clients
with a more focused online experience.
c. Create and maintain a Member Portal so that members can
check eligibility and
providers in network.
d. Careington needs to build a more complete marketing
department that includes
corporate level executives and staff to monitor and promote the
new programs.
• Conduct appropriate analytical drill-downs to identify
necessary changes in the firms
resources, managerial preferences and organizing processes and
the efforts that will be
needed to ensure that they are appropriately positioned and
combined to achieve each of
the three required new capabilities.
• Identify the departments (functional areas) that would be most
significantly affected by
the recommended changes to each of the three required
capabilities. If a proposed
capability change cuts across multiple functions, make note of
this and be sure to
remember it when you are developing more specific functional
plans in the next section.
• You must broadly identify the impact that the proposed
functional level changes would
have on both the revenues and expenses of the company. That
is, what will it cost to
make each of the various changes that you are proposing? Will
any of the changes
increase or decrease existing operating costs? What, if any,
impact will each of the
changes have on the company’s revenues? Be as detailed as
possible and do necessary
research to make appropriate assumptions and forecasts.
Consider using a chart like the following to lay out all of the
information that you are gathering
and to help you determine where you will need to generate
additional information.
Initial
Ideas on
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Changes
Capabilit
y Being
Addresse
d (pull the
appropriat
e
capabilitie
s from
your
preferred
strategic
proposal)
Is it a New
Capability
or an
adjustmen
t of
Existing
Capabiliti
es?
Explain
Importance
of
this Capabi
lity in
Achieving
Strategic Fit
(Some of the
justification
may be
found
in Part-2 B
of the SBI
Process)
Changes in
Resources,
Manageme
nt
Preferences
and/or
Organizatio
nal
Processes to
achieve this
Capability
Function
al Areas
Effected
Cost of
Implement
ing Change
Impact (if
any) on
ongoing
operating
costs or
revenues
Operatio
nal
Capabilit
y
Expandin
g the
Marketing
Departme
nt to add
corporate
focused
employee
s.
This is
New
Capability
Of high
importance
to the new
strategy.
1.They will
have to
change
resources
because they
will have to
add
additional
employees
to the
marketing
group.
2.The
marketing
department
will be
effected if
the
Management
is against
hiring more
personnel.
3. Find a
1.Marketi
ng
Departme
nt
2. HR
1. $70,000
per year for
a marketing
manager
2.$61,700
for a Web
designer
3. $55,000
for a PR/
social
media
4. $48,800
Graphics
designer
This change
will bring in
more
revenues by
drawing
attention to
the
Careington
brand name.
Operational
cost was
addressed in
the hiring of
new
employees.
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organization
al fit for the
new
Employee.
Customer
Capability
Adding a
new focus
from B2B
to B2C.
This is of
high
importance
to the new
strategy.
1.Manageme
nt
Preference:
Management
will have to
be more
flexible and
switch in
focus.
2.
Organization
al Processes:
New
Marketing
Strategies
will have to
be brought
on board to
focus on the
customer
instead
of businesse
s
1.
Marketin
g
Departme
nt
2. Sales
Departme
nt
3. IT
departme
nt
1. Salaries
of the new
employees
2.
additional
time spent
by sales and
IT
1. Revenues
will increase
because of
hitting a new
market
center.
2. Costs will
increase
because of
the
additional
employees
added to the
marketing
department
Wiki
Template
Part-­‐2:
Gaps,
Issues
and
New
Strategy
BUSI
4940
–
Business
Policy
15
Innovatio
n
Capabilit
y
Create a
new Intro
portal for
potential
new B2C
customers
New
Capability
The
importance
of this
strategic step
is of medium
importance.
1. Web
design in
creating the
new portal,
Marketing
will assist in
making
customers
aware of the
new website.
2.
Management
will have to
be on board
with the new
source of
focus
3. Sales will
have to
focus on
bringing in a
new set of
customers,
Marketing
will assist
Sales by
developing
the tools
needed to
reach
customers.
1. Sales
2.
Marketin
g
3. IT
Cost of
Mass
Marketing.
Fill in
later.
Large up
front cost for
implementati
on, minimal
upkeep
costs.
Revenue
potential is
high.
Create
and
Maintain
a Member
Portal for
provider
look ups
and
coverage
questions.
New
capability
Medium
Importance,
Mostly for
ease of
customer
1. Web
design in
creating the
new portal,
Marketing
will assist in
making
customers
aware of the
new website.
2. Marketing
1. IT
2.
Marketin
g
1. Time
spent by IT
and
Marketing
Minimal cost
to keep the
customer
happy.
Wiki
Template
Part-­‐2:
Gaps,
Issues
and
New
Strategy
BUSI
4940
–
Business
Policy
16
will have to
make
customers
aware of the
new tool.
.
References
A.M. Best Company. (2003). Best's Insurance Reports. Oldwick,
N.J: A.M. Best Co.
United States. (2006). Proceedings of 87th National Convention
of the American Legion,
August 23-25, 2005, 109-2 House Document 109-87.

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The chart is a guide rather than an absolute – feel free to modify.docx

  • 1. The chart is a guide rather than an absolute – feel free to modify or adjust it as need to fit the specific ideas that you are developing. Area: SALES Specific Change Plans for Functional Areas Capability Being Addressed This can be pulled from the strategic proposal recommended in Part 2B How do the recommended changes (details provided below) help improve the capability? This is a logic "double check". Be sure you can show how the changes recommended below improve the capability and help address the product and market focus and add to accomplishment of the value proposition
  • 2. Details of Specific Changes: Proposed Changes in Resources Proposed Changes to Management Preferences Proposed Changes to Organizational Processes Detailed Change Plans
  • 3. (Lay out here the specifics of all recommended changes for this area. Modify the layout as necessary to account for the changes being recommended) Proposed Change Timing Costs On going impact on budget On going impact on revenue
  • 5. Strategy BUSI 4940 – Business Policy 1 THE ENVIRONMENT/INDUSTRY 1. Drivers of change Key drivers of change begin with the availability of substitute products. Many other companies can easily provide a substitute and the firm will have to find a way to stand out among them. Next would be the ability to differentiate yourself among other firms that pose a threat in the industry. Last, the political sector. The the federal, state, and local governments could all shape the way healthcare is everywhere. 2. Key survival factors
  • 6. Key survival factors would include making the firm stand out above the rest in the industry and creating a name for itself. Second would be making sure there is a broad network of providers available for the customers. Giving the customer options will make the customer happy. Providing excellent customer service is key to any firm in the industry. 3. Product/Market and Value Proposition possibilities Maintaining the use of heavy discounts will keep Careington in the competitive market. They also concentrate on constantly innovating technology to make sure that they have the latest devices to offer their customers. To have high value proposition, Careington will need to show their costumers that they can believe in them and trust them to do the right thing. Showing the customers that they can always be on top of the latest technology and new age products will help build trust with the customers.
  • 7. STRATEGY OF THE FIRM 1. Goals Striving to promote the health and well being of their clients by continuing to provide low cost health care solutions. A lot of this concentration is on clients that cannot afford health care very easily or that are uninsured. 2. Product focus and market focus Market focus has always been providing the low cost products no matter if it is an individual or corporation. The products include dental care, laboratory services, nursing services, alternative health and medicine, and diet and weight loss solutions. 3. Value proposition Always providing low cost health care and providing products and services beyond the norm for health care, Careington has created high value within their clients. 4. Core Activities Wiki Template Part-­‐2:
  • 8. Gaps, Issues and New Strategy BUSI 4940 – Business Policy 2 Providing everything from health care solutions to everything in between including care for the customers pets, financial needs, counseling, and much more. Careington provides much more than just based health care. They go beyond the basics to cover every aspect of the customers needs. ORGANIZATIONAL CAPABILITIES OF THE FIRM
  • 9. 1. Noticing at all times that the customer is always looking to save money when subscribing to their services. 2. Striving to make sure that they can offer the best customer service in the market. This comes from sales services to after-sales service to customer service for existing customers. 3. Always investing in ways to create a product that can be offered at discount prices and packaging plans to save the customer money. PERFORMANCE OF THE FIRM 1. Financial Performance Careington Company has estimated annual revenue of $19.9 million. The company employs a workforce of 51 and 200 professionals. The company uses its finances equitably among its various operational sectors. Most of the company’s finances are directed towards realization of projects which helps it achieve its goals and objectives. In order to maintain a strong motivated workforce, the company operates a reasonable remuneration system for its workers. The company has had a reasonable financial record over the years with accurate record keeping and accountability in all its sectors (United States, 2006).
  • 10. 2. Market Performance The company has entered into a contract with Metropolitan Life Insurance Company, Inc. to provide a free discount prescription card via MetLife’s United States Sponsored Direct business network. This is a sales channel which partners with sponsors in order to provide their clients or members with simple, cheap products which meet the requirements of the United States market. The company is able to do business with other business partners of MetLife through the agreement. These other businesses include financial institutions, loyalty clubs, associations, as well as publishers (A.M. Best Company, 2003) The company provides cheap solutions to more than eight (8) million people who are members of the company. It has over 196, 000 dental access points and provides one of the biggest in depended provider panel in the U.S. As the holder of the industry’s biggest provider networks, the company is usually called upon to work directly with a number of most treasured PPOs, HMOs, as well as national insurance corporations (United States, 2006). Wiki Template Part-­‐2: Gaps,
  • 11. Issues and New Strategy BUSI 4940 – Business Policy 3 3. Organizational Health The company’s solutions are designed to help and complement traditional health insurance and give significant savings for those individuals who are uninsured or are under- insured. It also provides the healthiest cost reduction twice or thrice bigger than majority of dental services companies in the country (United States, 2006). With over eight million satisfied individuals and growing, the company has strategically placed itself to become the most creative and innovative dental partner in the United States of America. Regardless of whether you are a small worker group or a big self-sponsored organization, the company will customize a dental program particularly for you.
  • 12. The company, in fact, asks the client to participate in designing the program. Careington has the ability to even package ancillary services like prescription and vision drug discounts with the client’s dental program (A.M. Best Company, 2003) The discount prescription cards provided by the company though its partnership with MetLife frees of charge enables design members as well as their families to pay a discounted amount at the place of service for name-brand as well as generic prescriptions at broadly participating pharmacy sites all over the country, including independent as well as local neighborhood dispensaries. MetLife sponsor customers simply who must simply agree to provide free descriptions discount cards and Careington shall then distribute the cards to all customer members who are participating (United States, 2006). 2. ORGANIZATION AND ANALYSIS a. The Strategy ßà Environment Link Compare the drivers of change and key survival factors of the environment with the strategy components of the firm. Identify: ● Where, if at all, there is a good fit between environmental demands and the firm’s strategy. That is, identify how the strategy does a good job of addressing/responding to specific drivers and/or KSF. ▪ The Firm has made a good fit for itself in the environment because the
  • 13. environment is full of consumers that are under or uninsured and that is the perfect market base for Careington. Carington has made adaptations to the environment by responding to the need for individual consumer suplementation as well as Business needs. ● Where, if at all, there is a misfit between the environmental demands and the firm’s strategy. That is, identify how the strategy does a poor job of addressing/responding to specific drivers and/or KSFs ▪ There may be a gap between Careington’s current strategy and the technology race that has flooded the country. Their website doesn’t pull Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy
  • 14. 4 on google unless you ask specifically for “Careington”. That could be a possible place that they loose business. ● Where there are potential future misfits (given current industry trends). That is, identify where the strategy is likely to fall short of addressing/responding to specific drivers and/or KSFs in the future ▪ There may be a gap in the marketing sector. They have built a good brand and need to be able to get their name out to the potential individual customers rather than focusing all of their energy on B2B. b. The Strategy ← → Org.s Capabilities Link Now look inside the firm and compare the package of Org. Capabilities created by Resources, Management Preferences, and Organization with the strategy components of the firm. Identify: ● Where, if at all, there is a good fit between the org. capabilities of the firm and the
  • 15. firm’s strategy. That is, show how the capabilities support specific aspects (value proposition, goals, etc.) of the firm’s strategy ▪ There is a good fit between the organizations customer capabilities and the strategy. Customer service is important to the company and they show that through their Member services department’s support of the customers. ● Where, if at all, there is a misfit between the org. capabilities of the firm and the firm’s strategy. That is, show how the capabilities fail to support specific aspects (value proposition, goals, etc.) of the firm’s strategy ▪ The place that there is a misfit between the strategy and the capabilities is in their provider portal. They could utilize this instrument much more efficiently. ▪ Management decisions to improve communications to the outside. Public relations needs to get the name out in the open. ● Where there are potential future misfits (given current trends within the firm). That is, show where/how the capabilities may fail to support specific aspects (value proposition, goals, etc.) of the firm’s strategy in the future ▪ There is a potential for future misfits in their innovative capabilities. They
  • 16. have a good network now, but in the future they will need to be able to more technologically advanced to serve the providers and members better. c. Firm Performance and Strategic Gaps Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 5 Theory and empirical research inform us that firm performance
  • 17. is closely related to the firms position vis-à-vis the criterion of consistency. That is, the better the fit among the three components of in the criterion of consistency framework, the better is the firm’s performance. Review the results of your “fit” analysis and attempt to document how the fits/misfits identified in your analysis may explain the achievements or lapses in firm performance on one or more of the three dimensions: financial performance, market performance and organizational health The presence of fits and misfits within an organization can have a substantial influence on Careington’s financial performance, market performance, and it’s organizational health. Though successful they still continue to improve their market performance and organizational health. Currently, Careington has been working hard to not only retain but also expand their market share as well as build and sustain a more competitive advantage in the market place. Careington has used several successful approaches to maintain its competitive advantage over its competitors. One way they keep a competitive advantage over competitors is by offering deep discounts with a reliable network, they do this getting low discounts then negotiating lower discounts which makes it difficult for competitors to compete with them. Another way Careington provides excellent service is by building, nurturing and maintaining a good relationship with their service providers. They do this by having staff dedicated to taking care of
  • 18. different issues with members and their providers. Careington is also good at complying with the strict licensing guidelines. they do this by making sure they are up to date with the most current legislation and keeping up with the state regulatory requirements. Their main focus and strongest competitive advantage is to keep a strong and enduring relationship with their B2B customers. They maintain this strong by having face to face meeting, as well as networking rather than the traditional efforts of marketing and promotions. By them going through all this trouble to maintain a good relationship with their providers and clients, while still offering a good product for a low price this helps them increase not only their market performance and organizational health but help them increase their financial performance. On the other hand, with the the discounted health care plan market competition rising, differentiating the selves from consumer is key to success for Careington. Careington currently suffer from low awareness of their company and products. they also lack the technology to stay competitive with the rising popularity of telemedicine. The also prefer to improve all their other aspects of their company rather than improving their brand. Since the current market is trending to a more individual model, Careington is looking into entering that potentially profitable market. They also would like to continue to increase customer awareness of their discount products through face to face meeting, and networking. They recognize that they are in need of mass
  • 19. Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 6 marketing to reach a larger segment so people know about what they have to offer. Their fears of mass marketing are that their ROI won't be high enough to cover what their going to be spending on mass marketing since it tends to be very expensive. Another one of their fears is that they don't know exactly what their customers use their discounts for since they don't require their providers to them with data, which makes it harder for them to
  • 20. figure out who and what they should target. If they keep lacking at awareness, with the rise in competition they are bound to lose their good market performance and organizational health, as well as a decline in their financial performance. 3. CONCLUSIONS AND RECOMMENDATIONS Given the above, answer the following questions: a. Overall FIT and Symptoms: Taken together, how do you see the overall alignment among the elements of the “criterion of consistency”? That is, is there a good fit, an ok but weakening fit, a poor fit, a really bad fit, etc.? Be sure to explain WHY you believe this is the case. Next, refer back to your assessment of firm performance and show how this fit (or lack of fit) is reflected in the performance of the firm. That is, can the “symptoms” of underlying problems (e.g., decreasing sales or market share, poor profitability, disgruntled employees, etc.) identified in your analysis of the firm’s performance be traced to specific strategic “fit” problems? b. Selecting the Most Significant Issues Facing the Firm: Based on the fit/misfit identified above, highlight the areas that
  • 21. you see as the biggest issues/problems. That intent here is to move beyond the symptoms identified through performance and other previous analysis above to reveal the underlying causes that the firm must address. That is, what is causing the symptoms (e.g., decreasing sales or shrinking market share, poor profitability, disgruntled employees, etc.) that were identified above? Where possible, these causes should be expressed in terms of the alignment (or misalignment) between specific strategy components and specific aspects of the environment and/or org. capabilities (e.g., the product/market focus is no longer appropriate for the environmental conditions of … because; the … org. capabilities do not support the value proposition because ..., etc.). Technological/innovative growth overtaking many of the services provided in Careington’s industry, reducing value of their particular service by replacement with technology. Need for an increase in business or else will flat compared to competitive alternatives- hesitance in mass-marketing (a weaker part of their strategy) could result in inability to surpass growing competition and lose customer basis. Wiki Template
  • 22. Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 7 c. Project Future Performance of the Firm Given the Challenges identified in “a’ and “b” above: Given your descriptions of this “current state” of the firm, what would you expect performance to be like in the next few years if they do not make any changes to their strategy and/or operations? Undertake the following: I. Briefly describe the likely future state of the firm in words, showing where/how the issues identified above are likely to affect the actions and
  • 23. outcomes of the firm. In the future, Careington is likely to continue to experience growth similar rates as the past, per indications in the steady growth rates. 5 years from now, however, they might experience a static or smaller rate of growth, because the industry which it performs is growing in competitiveness and Careington is not showing in their financials any action to improve the rate of growth which it falls align to. -Issues (listed above) likely effect on the future outcomes and actions: II. Use techniques taught in earlier classes (e.g., accounting, finance, marketing, etc.) to project a 5-year pro forma income statement that assumes a logical progression of the firm’s current strategic fit and performance levels. Specifically, do the following: ● Use a 5-year timeframe ● Use the common-size (sometimes called “vertical analysis”) technique/tool to project the performance of the firm over the next five years, assuming that (a) it makes no changes to its current strategy or capabilities and, (2) industry changes will occur in the direction predicted by you in Part-1A of the SBI process ● Provide this projection, in a table, and on a single page ● Use additional sheets (if needed) to identify the “base components” line
  • 24. item used in the computations of other line items, any assumptions made, and any clarifications that are deemed necessary Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 8
  • 25. Like mentioned before, Careington is likely to keep experiencing steady growth at similar rates as in previous years. A trend projection analysis was performed using a regression line (Sales Revenue = 123.56 + 17.65*Period) taking in count sales revenue for the past three years and any expected industry changes that could occur in the following five years. PART 2-B SELECTING A NEW STRATEGY In the previous steps, you evaluated the current fit in the company and, in doing so, highlighted the major issues/problems faced by the firm. Your task now is to generate and evaluate possible solutions. Given your previous work, you probably have a number of ideas of what the company “could do”. Note that this is very different from what they “should do”. Following the process outlined below will help you move from generic “coulds” to justifiable “shoulds”. 1. DATA COLLECTION This is where you can collect all your ideas, new and old, about what the company could do. Try to brainstorm here, being open and not rejecting things at this point. The intent is to get
  • 26. Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 9 all of the ideas out on the table, and the only caveat is that the ideas be directed at solving the issues/problems addressed in the previous step. However, do try to channel your thinking into two broad categories: Strategic Adjustments: These are changes in strategy components (goals, product
  • 27. focus/market, focus, value proposition and core activities) that the firm could consider Focus the company on getting the name out to potential individual consumers. Technological advancement to the current technological era. Capability Changes: These are changes in org. capabilities that the firm could consider to address the strategic adjustments proposed (above) by you. They could add more strength to their marketing department. Right now Marketing is left to each department. They need to emphasize marketing the Careington brand as well as marketing to the business customers. 2. ORGANIZATION AND ANALYSIS OF DATA With all the ideas on the table, you now need to sort through and organize them into at least two viable strategic proposals (you are welcome to do more than two if you want). For each proposal, you need to document the following: a. Describe the specific changes in strategic components being recommended b. Clearly explain how and why you believe the proposal addresses the major
  • 28. issues/problems facing the company c. Describe, in general, the changes to the current capabilities that need to be made so that the firm can successfully implement its new strategy d. Identify (at least broadly) the impact that all these changes would have on both the revenues and expenses of the company. . Note: While there can be some overlap in the two proposals, they need to be unique in substantive ways. Proposal-1 a. Mass Marketing on a smaller scale (B2P focus) b. Targeted Social Media ads, Radio ads, Billboards, etc.referral systems Wiki Template Part-­‐2: Gaps, Issues and New
  • 29. Strategy BUSI 4940 – Business Policy 10 c. Switch the focus from B2B to B2C while creating a new “Intro Portal” to capture clients. Also building a more complete marketing department that includes corporate level executives to monitor and promote the new programs. d. There will be a large upfront cost of capital for the cost of the advertising, but the exposure of return will give at least a 10% ROI, helping to significantly grow the B2C portion of the company. Proposal-2 a. Build a second office on the west coast for Recruiting in
  • 30. major markets. b. Some west coast states, namely California, want easier access to the company. c. Switch the focus from B2B to B2C d. Big up front expense but saving on travel expenses. More direct contact with the customers will bring in more revenues. 3. CONCLUSIONS AND RECOMMENDATIONS - STRATEGIC CHOICE Now you must make a choice between your proposals. Use the information in your tables as well as any other thoughts you have to determine your preferred proposal. Then answer the following questions. ● Which proposal do you prefer? We prefer the first proposal. ● Why do you prefer this proposal?
  • 31. We think that this is the better all around approach to the needs and challenges that Carington is facing today. It provides a way for the company to expand their growth into the B2C sector while not abandoning the B2B side of the company. It will also come at minimal costs to other mass-marketing campaigns, and based on the ROI, the program could be expanded in the future. Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940 – Business Policy 11
  • 32. ● Which proposal carries more risk? Why? The second proposal carries more risk due to the large upfront cost of placing a new location. All business operations can be taken care of out of the central office in Texas. While there would be a reduced cost of travel, it is unknown if there would be enough business to support the cost of the new building. ● What might occur (inside or outside the firm) that would make your preferred proposal fail? If there are major changes in the way that discount dental plans are regulated, or if there is a major change in the way health care is used in the United States. PART 3-A DEVELOP NECESSARY CHANGES TO ORG. CAPABILITIES AND A PLAN TO IMPLEMENT THEM Now that you have selected a strategic proposal, you need to provide an analysis of the changes to various organizational components that are necessary to develop the org. capabilities that will
  • 33. make the strategy a success. This includes recommendations on both how and when these organizational components need to be adjusted to meet the needs of the new strategic proposal as well as reasonable forecasts of the cost and revenue implications of each change. Use a 5-year time-frame for the analysis. Readings in the book and supplements highlight a number of broad issues to consider in putting together your implementation plan. Class material offers additional specific ideas. We suggest that you carefully review this material and consider the ideas suggested. 1. DATA COLLECTION To accomplish the task laid out for you, the following information must be generated or collected. Completing this analysis in the sequence provided will help to ensure a logical flow between the pieces. Wiki Template Part-­‐2: Gaps, Issues and
  • 34. New Strategy BUSI 4940 – Business Policy 12 Note: This is a long and labor-intensive exercise!!!! Budget your time accordingly. 1.1 Initial Change Ideas • In Part 2-B you developed a list of broad changes to the org. capabilities that would be needed to support your proposed strategy changes. Build on these to describe in more detail specific changes to the current org. capabilities that need to be made so that the resultant “new” capabilities (alterations to existing capabilities and/or truly new org. capabilities) can be used to successfully implement the new strategy. a. Careington needs to switch the focus from their current B2B focus to a B2C focus to bring in the individual.
  • 35. b. They need to create a new “Intro Portal” to their website to capture new clients with a more focused online experience. c. Create and maintain a Member Portal so that members can check eligibility and providers in network. d. Careington needs to build a more complete marketing department that includes corporate level executives and staff to monitor and promote the new programs. • Conduct appropriate analytical drill-downs to identify necessary changes in the firms resources, managerial preferences and organizing processes and the efforts that will be needed to ensure that they are appropriately positioned and combined to achieve each of the three required new capabilities. • Identify the departments (functional areas) that would be most significantly affected by the recommended changes to each of the three required capabilities. If a proposed capability change cuts across multiple functions, make note of this and be sure to remember it when you are developing more specific functional plans in the next section. • You must broadly identify the impact that the proposed functional level changes would have on both the revenues and expenses of the company. That is, what will it cost to
  • 36. make each of the various changes that you are proposing? Will any of the changes increase or decrease existing operating costs? What, if any, impact will each of the changes have on the company’s revenues? Be as detailed as possible and do necessary research to make appropriate assumptions and forecasts. Consider using a chart like the following to lay out all of the information that you are gathering and to help you determine where you will need to generate additional information. Initial Ideas on Wiki Template Part-­‐2: Gaps, Issues and New Strategy BUSI 4940
  • 37. – Business Policy 13 Changes Capabilit y Being Addresse d (pull the appropriat e capabilitie s from your preferred strategic proposal) Is it a New
  • 38. Capability or an adjustmen t of Existing Capabiliti es? Explain Importance of this Capabi lity in Achieving Strategic Fit (Some of the justification may be found in Part-2 B of the SBI Process) Changes in Resources, Manageme nt Preferences and/or Organizatio nal Processes to achieve this Capability
  • 39. Function al Areas Effected Cost of Implement ing Change Impact (if any) on ongoing operating costs or revenues Operatio nal Capabilit y Expandin g the Marketing Departme nt to add corporate focused employee s. This is New Capability Of high importance
  • 40. to the new strategy. 1.They will have to change resources because they will have to add additional employees to the marketing group. 2.The marketing department will be effected if the Management is against hiring more personnel. 3. Find a 1.Marketi ng Departme nt 2. HR 1. $70,000 per year for a marketing
  • 41. manager 2.$61,700 for a Web designer 3. $55,000 for a PR/ social media 4. $48,800 Graphics designer This change will bring in more revenues by drawing attention to the Careington brand name. Operational cost was addressed in the hiring of new employees. Wiki Template Part-­‐2: Gaps, Issues
  • 42. and New Strategy BUSI 4940 – Business Policy 14 organization al fit for the new Employee. Customer Capability Adding a new focus from B2B to B2C. This is of high importance to the new strategy.
  • 43. 1.Manageme nt Preference: Management will have to be more flexible and switch in focus. 2. Organization al Processes: New Marketing Strategies will have to be brought on board to focus on the customer instead of businesse s 1. Marketin g Departme nt 2. Sales Departme nt 3. IT departme nt
  • 44. 1. Salaries of the new employees 2. additional time spent by sales and IT 1. Revenues will increase because of hitting a new market center. 2. Costs will increase because of the additional employees added to the marketing department Wiki Template Part-­‐2: Gaps, Issues and New
  • 45. Strategy BUSI 4940 – Business Policy 15 Innovatio n Capabilit y Create a new Intro portal for potential new B2C customers New Capability The importance of this strategic step is of medium
  • 46. importance. 1. Web design in creating the new portal, Marketing will assist in making customers aware of the new website. 2. Management will have to be on board with the new source of focus 3. Sales will have to focus on bringing in a new set of customers, Marketing will assist Sales by developing the tools needed to reach customers. 1. Sales 2.
  • 47. Marketin g 3. IT Cost of Mass Marketing. Fill in later. Large up front cost for implementati on, minimal upkeep costs. Revenue potential is high. Create and Maintain a Member Portal for provider look ups and coverage questions. New capability Medium Importance,
  • 48. Mostly for ease of customer 1. Web design in creating the new portal, Marketing will assist in making customers aware of the new website. 2. Marketing 1. IT 2. Marketin g 1. Time spent by IT and Marketing Minimal cost to keep the customer happy. Wiki Template Part-­‐2:
  • 50. References A.M. Best Company. (2003). Best's Insurance Reports. Oldwick, N.J: A.M. Best Co. United States. (2006). Proceedings of 87th National Convention of the American Legion, August 23-25, 2005, 109-2 House Document 109-87.